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“Rainy Day Fund” or “Everyday Fund”?

“Rainy Day Fund” or “Everyday Fund”?

| June 15, 2017
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I just re-read Samantha Irby’s hilarious piece in the NYT Sunday Review from a few weeks ago: “If Every Day Is a Rainy Day, What Am I Saving For?” I absolutely loved it because it’s so relatable! As a working mom running a business advising other people about money stuff, I push myself pretty hard and hold a high bar for my own financial goals. Needless to say, I’m human and striving for perfection is a hopeless pursuit. We do the best we can and step-by-step we make progress. With kids and a house and a business, things ALWAYS come up!

Jayde Perkin

Artwork by Jayde Perkin

We all face the risk of allowing our “rainy day fund” to morph into an “everyday fund.” It seems like there’s always something that causes us to dip into it: something breaks, someone gets sick, something stops working, something falters, something or someone gets a virus and on and on and on. Facebook allows us a window into everyone’s joys and pains and, friends? I FEEL YOUR PAIN! Here’s a list of some of the usual happenings that cause us to cough up a hefty sum from that so-called rainy day fund:

  • Vet Bills: The cat ate the toy foam discs and requires surgery – mortgage payment-sized bill.
  • Divorce: Some things just don’t work out. Now with the same income, there’s two homes and if you add up the double utilities and furniture costs and all the attorney bills and all that counseling everyone needs to manage through the seismic shift…it all adds up.
  • Death: Wife or husband passes away unexpectedly…happens more often than you’d like to think. Our age may give us a sense of security (or immortality) but losing a spouse can suddenly shake the financial foundation of young families, too.   
  • Car Repair: It could be any number of things but I’m personally postponing four new tires. Those tires will set me back $700. It’s always expensive if you do what the folks at the shop “recommend” you do. Sigh.
  • New Laptop: Kid relieves himself on laptop keyboard…priceless moments of toddlerhood but also pretty spendy to replace and you really never saw it coming!
  • Job Change: Your new boss and you don’t get along – job insecurity breeds anxiety and yes, sometimes this leads to a much-dreaded meeting with HR that lands you crying in the bathroom. Financial duress ensues. Or maybe you work up the nerve to leave a job that doesn’t bring you joy. Cue the joy of being without an income!
  • Hospital: Your kid is diagnosed with a disability requiring expensive treatment and possibly a school change. Cha-ching.
  • More Hospital: Your kid is diagnosed with an illness that takes you away from work to care for them for an extended period of time. Cha-ching again!
  • Money Pit: The house you bought requires something major—roof, landscaping, windows, furnace, etc. Cue the tears when the estimates come back from the contractors.

Add the regular everyday stuff: preschool tuition, summer camp bills, music lessons, birthday parties, school loans, taxes and insurance and it goes on and on and on…

Adulting is hard, as they say.

So my question is: How do we manage through this oppressive stage of life where it feels like the financial pressure will never let up? My answer: budget.

Budget Like a Rockstar

There are many strategies to live within your means but most importantly, you must commit to your financial reality and be honest with yourself. Denial will dig you deeper into trouble.

Trouble, Oh We Got Trouble…

“D” Stands for Debt

Do we need to go there, to Debt Land? It is such a downer. Indeed, let’s go there because many people visit Debt Land at all stages of life. They quietly go into debt and struggle with carrying that heavy weight. If you don’t have a solid emergency fund set aside, then what are the options when the unexpected occurs? 

There is a hopelessness in surrendering to the weight. Keeping up with the Joneses is a contagion you better not catch. The myriad reasons to justify spending just lead you deeper into Debt Land.

My son turned 9 last week and since only one friend was in town, I told him he could have his choice since money wouldn’t be an issue since it’s only a couple of kids. Boy was I wrong! Dave & Buster’s is a place I’ve never been and won’t soon return. What a racket that place is! It’s like Vegas for kids. I was strategic about the budget but I was also very generous. I try to teach my kids frugality but balance it with a sense of security. We have enough. More importantly, “We have enough because we make good choices with our money.” This is a sentiment I share with them frequently. It tells my children what we're prioritizing when we don't purchase something they want whether we can afford it or not. 

This is the legacy I inherited from my accountant father. I used to laugh about my parents’ frugality. Now I totally get it and I totally get them! I tucked myself into a booth at the overpriced high-class arcade and after I deposited more money onto the kids’ cards through the Free Dave & Buster’s App on my phone…then I texted my mom…

I marveled to her at the fact that all these people so freely spent mindlessly on such frivolous and fleeting enjoyment. Oh, the jealousy my kids’ 529 accounts would feel to know the money I’m blowing on virtual jump ropes that gobble up a couple bucks at each turn. That’s right! $2 every minute! Wow! What was I thinking?

Well, the kids were happy and of course, that was the whole point. However, as a goody-two-shoes financial advisor, I realized an important lesson: Ignorance really is bliss… until reality bites!

It’s important to get smart and clear about your money. Simplify your life and reduce your spending and stick to a sensible budget. It’s the little decisions we make every day that really add up and make a big difference in the long run. It’s not always easy to do but a crucial aspect of successfully building wealth is keeping your spending in check.

 

 

 

 

 

  

 

 

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